Third-quarter earnings at Riggs National Corp. in Washington are likely to be "materially affected" by fraud linked to an $11 million loan to a London borrower, the company said.
While it did not release any details of the alleged wrongdoing, $5.7 billion-asset Riggs said late Wednesday that it may need to take a provision for loan losses for the entire $11 million. The company added that it has more than enough capital - $841 million at the end of the second quarter - to cover its losses.
Riggs has hired an accounting firm to help it determine precisely how much it stands to lose and to assist with recovery efforts.
News of the problem loan comes on the heels of two solid quarters at Riggs. It had first-half net income of nearly $22 million, up 27%, and third-quarter earnings of $7.2 million.
Riggs' stock fell 5.3% on the news, closing at $12.1875 Thursday.